By the middle of the decade the signs of recovery were increasing in Ann Arbor; Thanksgiving turkeys returned to many dinner tables. While unemployment and the need for relief continued (and even increased during the recession in 1937-38), the amount of permanent unemployment was decreasing. In November 1937 a special federal census revealed that unemployment in Washtenaw County had declined considerably from the twenty per cent level of the worst years of the depression.

A slow but steady recovery was indicated in the expansion of existing industries and by the entrance of new companies. King-Seeley, Ann Arbor's largest industrial employer, built three additions to its factory after 1935, and quadrupled its employment from 200 in 1930 to 800 in 1936. The American Broach and Machine Company, expanding its plant in 1935 and again in 1936, employed 140 men who produced metal parts destined for Europe and Russia.

With the repeal of prohibition in 1932, the city's beer industry revived. The Ann Arbor Beer Company replaced the pre-prohibition Michigan Union Beverage Company as the German brewing art flourished once again. To bring power tools, such as saws and drills, within the reach of average householders, Double A Products Company was organized in Ann Arbor in 1934. In the following years they marketed a line of 200 products. The most significant industrial newcomer, the International Radio Corporation, came to Ann Arbor in 1931 and employed 150 men. Not only did it produce the popular and economical radio "Kadette Jewel," and the Argus camera, but also by merging its radio and photographic interests it began experimenting with a new phenomenon called television.

Prosperity slowly returned to the retail business. After 1935 dozens of new businesses appeared in the city directory and the number of retail employees increased from 1,932 in 1929 to 2,841 in 1940. According to a 1936 survey the amount of retail sales per capita in Washtenaw County was $599.00--the highest in the State of Michigan. Main Street and State Street shopping areas and the newly located Farmers' Market supplied a full range of food, clothing, and appliances. Increased farm purchasing power, augmented by government checks, and the renewed influx of University students in 1935 combined with the optimistic outlook of local industry to make Ann Arbor the retail center for a growing town and its surrounding countryside.

The construction of new buildings not only resulted from the increasing prosperity but also added to it. Between 1930 and 1936, assets of the University's physical plant increased to $7 million in valuation. Noteworthy among new buildings made possible by generous gifts were Hutchins Hall, the Rackham Building, and Burton Memorial Tower. The pre-1930's commitment to provide dormitories was fulfilled with the help of federal funds in the construction of West Quadrangle, East Quadrangle, and Stockwell Hall. Although the town was growing moderately, the population of school-age children mushroomed. Crowded classrooms prompted the construction of Stone Elementary School and Slauson Junior High School. In addition to business and industrial building the number of permits for housing steadily increased. New homes were ringing the city, which measured almost six miles square.

A final indication of increased economic prosperity was the rapid decline in delinquent taxes and the payment of back taxes. Encouraged by strict local ordinances and police cooperation as well as state deadlines for payment without added interest, Washtenaw County taxpayers paid up thousands of dollars of back taxes. In 1936, ninety-five per cent of Ann Arbor's current property taxes had been collected.